<PAGE>

                                                                    EXHIBIT 10.2

                              PANHANDLE STATE BANK

                       1988 NONQUALIFIED STOCK OPTION PLAN

         SECTION 1. Purposes. The purposes of the Panhandle State Bank
Nonqualified Stock Option Plan (this "Plan") are to further the growth, success
and interests of Panhandle State Bank (the "Company") or of any parent,
subsidiary, or subsidiary of a subsidiary (as defined in subsection 5.5 and
referred to hereinafter as "related corporations") thereof, and to enable the
Company to obtain, retain and reward the services of selected employees,
directors, and officers of the Company or of any related corporation by enabling
such employees, directors, and officers to acquire stock of the Company subject
to the terms and conditions and in the manner contemplated by this Plan.

         SECTION 2. Administration. This Plan shall be administered by the Board
of Directors of the Company (the "Board") or, in the event the Board shall
appoint and/or authorize a Compensation Committee to administer this Plan by
such committee. The administrator of this Plan shall hereinafter be referred to
as the "Plan Administrator."

         A member of the Board (or the Compensation Committee) may be eligible
to participate in or receive or hold options under this Plan; provided, however,
that no member of the Board or the Compensation Committee shall vote with
respect to the granting of an option hereunder to himself or herself, as the
case may be.

         Except for the terms and conditions explicitly set forth in this Plan,
the Plan Administrator shall have the authority, in its discretion to determine
all matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. The interpretation and construction by the Plan Administrator of
any terms or provisions of this Plan or any option issued hereunder, or of any
rule or regulation promulgated in connection herewith, shall be conclusive and
binding on all interested parties.

         SECTION 3. Stock Subject to this Plan. The stock subject to this Plan
shall be the Company's Common Stock, par value $7.50 (the "Common Stock"),
presently authorized but unissued or now held or subsequently acquired by the
Company as treasury shares. Subject to adjustment as provided in Section 6
hereof, the aggregate amount of Common Stock to be delivered upon the exercise
of all options granted under this Plan shall not exceed Twenty-one Thousand
(21,000) shares as such Common Stock was constituted on the effective date of
this Plan. If any option previously granted or granted under this Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall thereupon again be available for
purposes of this Plan.

         SECTION 4. Eligibility. An option may be granted to any individual who,
at the time the option is granted, is an employee, officer or director of the
Company. Any individual to whom an option is granted under this Plan shall be
referred to hereinafter as the "Optionee."

         SECTION 5. Terms and Conditions of Options. Options granted under this
Plan shall be evidenced by written agreements which shall contain such terms,
conditions, limitations and

                                       1
<PAGE>

restrictions as the Plan Administrator shall deem advisable and which are not
inconsistent with this Plan. Notwithstanding the foregoing, all such options
shall include or incorporate by reference the following terms and conditions:

         5.1 Number of Shares and Price. The maximum number of shares that may
be purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Plan Administrator, provided that the price shall not be less than the
par value per share of the Common Stock at the time the option is granted.

         5.2 Term and Maturity. The term of each option shall be as established
by the Plan Administrator and, if not so established, shall be ten (10) years
from the date it is granted. To insure that the Company will achieve the purpose
and receive the benefits contemplated in this Plan, any option granted to any
person hereunder shall, unless the condition of this sentence is waived or
modified by resolution adopted by the Plan Administrator, be exercisable
according to the following schedule:

<TABLE>
<CAPTION>
   Period of Optionee's
 Continuous Relationship
 With the Company from the                  Portion of Total Option
 Date the Option is Granted                   Which is Exercisable
 --------------------------                 ------------------------
<S>                                         <C>
       After 1 year                                  100%
      After 2 years                                  100%
      After 3 years                                  100%
      After 4 years                                  100%
</TABLE>

         5.3 Exercise. Subject to the vesting schedule described in subsection
5.2 above, each option may be exercised in whole or in part; provided, however,
that only whole shares will be issued pursuant to the exercise of any option.
Options shall be exercised by delivery to the Company of written notice of the
number of shares with respect to which the option is exercised, together with
the exercise price, in cash or bank certified or cashier's check, or personal
check, if permitted by the Plan Administrator, for the Common Stock begin
purchased. If permitted by the Plan Administrator, and to the extent permitted
by applicable laws and regulations (including, but not limited to federal tax
and securities laws and regulations), an option may be exercised by delivery of
shares of the capital stock of the Company held by the Optionee having a fair
market value equal to the exercise price, such fair market value to be
determined in good faith by the Board. As a condition to the exercise of an
option, the Optionee shall make such arrangements as the Plan Administrator may
require for the satisfaction of any federal, state or local withholding tax
obligations that may arise in connection with such exercise.

         5.4 Non-transferability of Option. Options granted under this Plan and
the rights and privileges-conferred hereby may not be transferred, assigned,
pledged, or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution, and shall not be subject to execution, attachment, or similar
process. Upon any attempt to transfer, assign, pledge, hypothecated or otherwise

                                       2
<PAGE>

dispose of any option under this Plan or of any right or privilege conferred
hereby, contrary to the provision hereof, or upon the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby,
such option shall thereupon terminate and become null and void.

         5.5 Termination of Relationship with Company. If the Optionee
terminates his or her relationship with the Company or any related corporation
for any reason other than the death or total disability of the Optionee, the
Optionee's option shall terminate (unless by its terms it sooner terminates and
expires) as to all shares for which it has not theretofore been exercised,
unless the Plan Administrator by resolution adopted prior to or within thirty
(30) days after the effective date of such termination of relationship with the
Company waives the conditions of this subsection 5.5. If an Optionee's
relationship with the Company or any related corporation ceases because of a
total disability, the Optionee's option shall not terminate until the end of the
twelve (12) month period following such cessation of relationship (unless by its
terms it sooner terminates and expires). As used in this Plan, the term "total
disability" refers to a mental or physical impairment of the Optionee which is
expected to result in death or which has lasted or is expected to last for a
continuous period of six (6) months or more and which causes the Optionee to be
unable, in the opinion of the Company, and two independent physicians, to
perform his or her duties as an employee, officer, or director for the Company
and to be engaged in any substantial gainful activity. Total disability shall be
deemed to have occurred on the first day after the Company and the two
independent physicians have furnished their opinion of total disability to the
Plan Administrator. For purposes of this subsection 5.5, a transfer of
employment or other relationship between or among the Company and/or any related
corporation shall not be deemed to constitute a cessation of employment or
termination of relationship with the Company or any of its related corporations.
As used herein, the term "related corporation" (other than a parent corporation)
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock of each of the
corporations other than the Company is owned by one of the other corporations in
such chain. When referring to a parent corporation, the term "related
corporation" shall mean any corporation in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the option, each of
the corporations other than the Company owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

         5.6 Death of Optionee. If an Optionee dies while he or she has a
relationship with the Company or any related corporation as an employee,
director, or officer or, in the case of a totally disabled Optionee, within the
twelve (12) month period following cessation of such relationship, options held
by such Optionee may, to the extent that the Optionee would have been entitled
to exercise such option, be exercised within twelve (12) months after his or her
death by the personal representative of his or her estate or by the person or
persons to whom the Optionee's rights under the option shall pass by will or by
the applicable laws of descent and distribution.

         5.7 Status of Shareholder. Neither the Optionee nor any person or
persons to whom the Optionee's rights and privileges under the option may pass
shall be, or have any of the rights or privileges of, a shareholder of the
Company with respect to any of the shares issuable

                                       3
<PAGE>

upon the exercise of any option granted under this Plan unless and until such
option has been exercised.

         5.8 Continuation of Employment. Nothing in this Plan or in any option
granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a related corporation, or to
interfere in any way which the right of the Company or of any such related
corporation to terminate his or her employment or other relationship with the
Company at any time.

         5.9 Modification and Amendment of Option. Subject to the terms and
conditions and within the limitations of this Plan, the Plan Administrator may
modify or amend outstanding options granted under this Plan. The modification or
amendment of an outstanding option shall not, without the consent of the option
holder, alter, impair, or diminish any of his or her rights or any of the
obligations of the Company under such option.

         SECTION 6. Adjustments Upon Changes in Capitalization. The aggregate
number and class of shares on which options may be granted under this Plan, the
number and class of shares covered by each out standing option and the exercise
price per share thereof (but not the total price), and each such option, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend, or any other increase or decrease in the number of shares of
Common Stock of the Company without the receipt of consideration by the Company.

                  6.1      Effect of Liquidation or Reorganization.

                           6.1.1    Cash Stock or Other Property for Stock.
Except as provided in subsection 6.1.2, upon a merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation of
the Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, any option granted hereunder shall terminate, but the Optionee
shall have the right immediately prior to any such merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation to
exercise his or her option in whole or in part whether or not the vesting
requirements set forth in the option agreement have been satisfied.

                           6.1.2    Conversion of Options on Stock for Stock
Exchange. If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger, consolidation, acquisition of property or
stock, separation or reorganization, all options granted hereunder shall
terminate in accordance with the provisions of subsection 6.1.1 unless the Board
and the corporation issuing the Exchange Stock, in their sole discretion and
subject to any required action by the shareholders of the Company and such
corporation, agree that all such options granted hereunder are converted into
options to purchase shares of Exchange Stock. The amount and price of such
options shall be determined by adjusting the amount and price of the options
granted hereunder in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the Common Stock receive in such merger,
consolidation,

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<PAGE>

acquisition of property or stock, separation, or reorganization. The vesting
schedule set forth in the option agreement shall continue to apply to the
options granted for the Exchange Stock.

                  6.2      Fractional Shares. In the event of any adjustment in
the number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.

                  6.3      Determination of Board to be Final. All such
adjustments shall be made by the Board, and its determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding, and
conclusive.

         SECTION 7. Securities Regulation. Shares shall not be issued with
respect to an option granted under this Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. Inability of the Company to obtain from
any regulatory body having jurisdiction, authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares shall
hereunder relieve the Company of any liability in respect of the nonissuance or
sale of such shares as to which such requisite authority shall not have been
obtained.

         As a condition to the exercise of an option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER.

         Should any of the Company's capital stock of the same class as the
stock subject to options granted hereunder if not previously listed on such
exchange shall be authorized by that exchange for listing thereon prior to the
issuance thereof.

         SECTION 8. Amendment and Termination. The Board may at any time
suspend, amend or terminate this Plan. No option may be granted after
termination or during any suspension of this Plan. The amendment or termination
of this Plan shall not, without the consent of the option holder, alter or
impair any rights or obligations under any option theretofore granted under this
Plan.

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<PAGE>

         SECTION 9. Indemnification of Board and Plan Administrator. In addition
to all other rights of indemnification they may have as Directors of the Company
or as members of the body serving as the Plan Administrator, members of the
Board and Plan Administrator shall be indemnified by the Company for all
reasonable expenses and liabilities of any type and nature, including attorneys'
fees, incurred in connection with any action, suit or proceeding to which they
or any of them are a party by reason of, or in connection with, any incentive
stock option granted hereunder, and against all amounts paid by them in
settlement thereof (if such settlement is approved by independent legal counsel
selected by the Company); provided however, that if such member or members are
adjudged liable for willful misconduct, the indemnification provisions of this
Section 9 shall not apply to expenses which relate to matters involving such
willful misconduct. This indemnification shall apply only if such member or
members notify the Company of such action suit or proceeding in writing, within
fifteen (15) days after institution of any such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to
prosecute or defend any such action.

         SECTION 10. Effectiveness of this Plan. This Plan shall become
effective upon approval by the Board of Directors and ratification by the
stockholders of the Company.

         Adopted by the Board of Directors and Shareholders of the Company on
April 16, 1988.

                                       6
<PAGE>

                                  AMENDMENT TO
                              PANHANDLE STATE BANK
                       1988 NONQUALIFIED STOCK OPTION PLAN

                  TO QUALIFY AS AN INCENTIVE STOCK OPTION PLAN
                     UNDER INTERNAL REVENUE CODE SECTION 422

                                    RECITALS

         WHEREAS, the Board of directors and Shareholders of PANHANDLE STATE
BANK, an Idaho corporation ("Bank"), adopted a plan on April 16, 1988, entitled
"Panhandle State Bank 1988 Nonqualified Stock Option Plan" (1988 Plan");

         WHEREAS, the individual option agreements pursuant to such 1988 Plan
have always been structured as Incentive Stock Option Agreements; and

         WHEREAS, the changes necessary to amend the 1988 Plan to qualify as an
Incentive Stock Option Plan would not constitute a "modification" under I.R.C.
Section 424(h)(3), because none of such changes would give the employees any
additional benefits under the option;

         NOW THEREFORE, the Bank hereby modifies the 1988 Plan as follows:

         1.       EFFECTIVE DATE OF AMENDMENT AND TERMINATION OF ENTIRE PLAN.
                  The effective date of this Amendment is April 16, 1988, the
                  date on which this Amendment was adopted by the Board of
                  Directors of Bank. However, the Amendment is subject to the
                  approval of the shareholders of the Bank. If the Amendments
                  are not approved by a majority vote of the shareholders of the
                  Bank by April 16, 1997, the Amendments shall terminate, and
                  all options granted pursuant to these amendments shall be null
                  and void.

                  The Plan shall terminate no later than Aril 16, 1998, which
                  date is ten (10) years after adoption of the 1988 Plan by the
                  Board of Directors and shareholder of Bank.

         2.       MODIFICATION OF SECTION 1; RESTRICTION OF APPLICABILITY TO
                  EMPLOYEES ONLY. The Plan shall apply only to employees of the
                  Bank, and not to any other persons, such as outside directors.

                  In furtherance of the preceding statement, and not in
                  limitation thereof, the phrase "directors" shall be deleted
                  from Section 1 of the 1988 Plan and wherever else it may
                  appear in the 1988 Plan.

         3.       MODIFICATION OF SECTION 2. Throughout the Plan, the term "Plan
                  Administrator" shall be replaced with the term "Committee."
                  Also, Section 2 shall be modified to read as follows:

                  2.       ADMINISTRATION OF PLAN. The Plan shall be
                           administered by a Stock Option Committee of not less
                           than three Directors of the Bank (hereinafter

                                       7
<PAGE>

                           referred to as the "Committee), appointed by the
                           Board of Directors. Members of the Committee shall
                           serve at the pleasure of the Board of Directors.
                           Vacancies occurring in the membership of the
                           Committee shall be filled by appointment by the Board
                           of Directors.

                           No member of the Committee, while serving as such,
                           shall be eligible to receive any option described
                           hereunder, although membership on the Committee shall
                           not affect or impair any such member's rights under
                           any option granted to him at a time when he was not a
                           member of the Committee. The committee shall keep
                           minutes of its meetings. A majority of the Committee
                           shall constitute a quorum thereof and the acts of a
                           majority of the members present at any meeting of the
                           Committee at which a quorum is present, or acts
                           approved in writing by a majority of the entire
                           Committee, shall be the acts of the Committee.

                           The Committee can only issue options as describe
                           herein.

         4.       MODIFICATION OF SECTION 4. Delete the term "inside director."

         5.       MODIFICATION OF PARAGRAPH 5.1 TO CLARIFY THAT PRICE IS BASED
                  ON FAIR MARKET VALUE RATHER THAN PAR VALUE. Replace the word
                  "par" with the term "fair market" on the fifth line of
                  Paragraph 5.1. In addition, add the following language:

                  In the case of the Incentive Stock Option granted to a person
                  than owning more than ten percent (10%) of the voting power of
                  the Bank, considering for this purpose shares of all classes
                  of the Bank's stock, the option price per share, as determined
                  by the Committee, shall be not less than one hundred ten
                  percent (110%) of the fair market value thereof on the date
                  the Incentive Stock Option is granted.

                  The fair market value shall be determined by the Committee
                  using a reasonable valuation method.

                  Add an additional paragraph at the end as follows:

                  The aggregate fair market value (determined on the date the
                  Incentive Stock Option is granted) of Common Stock subject to
                  an Incentive Stock Option granted to an Optionee by the
                  Committee in any calendar year shall not exceed One Hundred
                  Thousand Dollars ($100,000.00)

         6.       MODIFICATION OF PARAGRAPH 5.2. Replace the language in
                  Paragraph 5.2. with the following language:

                  5.2      PERIOD OF OPTION AND WHEN EXERCISABLE. An Incentive
                           Stock Option may be exercised at any time during a
                           period of ten years from the date of grant. However,
                           no Incentive Stock Option that is granted to an
                           individual who then owns more than 10 percent (10%)
                           of the combined voting power

                                       8
<PAGE>

                           of all of the Bank's outstanding shares may be
                           exercised after the expiration of five (5) years from
                           the date the Incentive Stock Option is granted.

                           An option may be exercised by the optionee only
                           during the continuance of the optionee's employment
                           by the Bank, provided that:

                           (a)      an Incentive Stock Option may be exercised,
                                    in whole at any time or in part from time to
                                    time, by an optionee within three (3) months
                                    after the date of termination of employment
                                    of the optionee with the Bank or a
                                    subsidiary if such termination results from
                                    retirement at the optionee's normal
                                    retirement date (as determined from time to
                                    time consistent with Bank policy) or from
                                    physical disability acknowledged as such by
                                    the Committee;

                           (b)      an Incentive Stock Option may be exercised
                                    within twelve (12) months after the death of
                                    an optionee in the period during which his
                                    Incentive Stock Option is exercisable, by
                                    the person or persons entitled to do so
                                    under the optionee's will or, if the
                                    optionee shall have failed to make
                                    testamentary disposition of such Incentive
                                    Stock Option or shall have died intestate,
                                    by the optionee's legal representative or
                                    representatives. Such person, persons,
                                    representative, or representatives are
                                    hereinafter referred to as the Successors of
                                    an optionee; and

                           (c)      unless otherwise waived or modified by
                                    resolution adopted by the Committee, all
                                    options shall be exercisable according to
                                    the following schedule:

<TABLE>
<CAPTION>
Period of Optionee's Continuous                Portion of Total
 Employment with the Bank from                 Option Which is
The Date the Option is Granted                    Exercisable
------------------------------                 ----------------
<S>                                            <C>
     After 1 Year                                      0%
     After 2 Years                                 331/2%
     After 3 Years                                66 2/3%
     After 4 Years                                   100%
</TABLE>

                                    Nothing herein shall be construed as
                                    extending the term of any Incentive Stock
                                    Option granted hereunder. Except as provided
                                    herein or as otherwise determined by the
                                    Committee, all Incentive Stock Options shall
                                    terminate upon the termination of the
                                    optionee's employment.

         7.       MODIFICATION OF PARAGRAPH 5.5. Insert a sentence immediately
                  following the first sentence to read as follows:

                                       9
<PAGE>

                  In the event of such a waiver, the Committee may extend the
                  exercise date to a date not later than three (3) months
                  following Optionee's termination of employment.

                  Throughout Paragraph 5.5, replace the term "relationship" with
                  "employment."

                  Replacement the last two sentences of Paragraph 5.5 with the
                  following language:

                  As used herein, the term "Related Corporation" shall refer to
                  "Parent Corporations" and "Subsidiary Corporations" only. The
                  terms "Parent Corporations" and "Subsidiary Corporations"
                  shall mean any corporation (other than the Bank) in an
                  unbroken chain of corporations that includes the Bank, if
                  stock possessing fifty percent (50%) or more of the total
                  combined voting power of all classes of stock of each oaf the
                  corporations in the chain (other than the top level Parent
                  Corporation) is owned by one of the other corporations (other
                  than the bottom level Subsidiary Corporation) in such chain.

         8.       DELETION OF PARAGRAPH 5.2. Delete Paragraph 5.6 because it has
                  been replaced by the modification to Paragraph 5.2.

         9.       MODIFICATION OF SUBPARAGRAPH 6.1.2. Add a sentence at the end
                  as follows: "Any such modified option for `Exchange Stock"
                  must also satisfy the provisions of Internal Revenue
                  Code Section 434(a).

         10.      MODIFICATION OF SECTION 8. Add a paragraph at the end as
                  follows:

                  Unless shareholder approval is obtained, the Board may not:

                  a.       Increase the maximum numbers of shares which may be
                           issued under the Plan;

                  b.       Extend the period during which any award will be
                           granted or exercised; or

                  c.       Extend the term of the Plan.

ADOPTED BY THE BOARD OF DIRECTORS OF THE BANK ON THE 14TH DAY OF FEBRUARY, 1996.

ADOPTED BY THE SHAREHOLDER OF THE BANK ON THE 20TH DAY OF APRIL, 1996.

         I, Terry Merwin, Secretary of PANHANDLE STATE BANK, attest tat the
above-stated Amendment to Panhandle State Bank 1988 Nonqualified Stock Option
Plan to Qualify as an Incentive Stock Option Plan Under Internal Revenue Code
Section 422 was adopted by the directors and shareholders of the Bank on the
dates set forth above. I made this attestation on April 20, 1996.

                                         /s/
                                         ---------------------------------------
                                         Secretary, Panhandle State Bank

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